The word "it" is just an irrelevant pronoun standing in for the offer that's been made. The "idiomatic" issue is that "take up [an offer] made by someone" transforms into "take [someone] up on [an offer]". Nor does the pronoun "you" make any difference - it's no different with "I should take John up on his offer".
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FumbleFingersNov 8 '12 at 1:56